[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2101 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2101

 To amend the Internal Revenue Code of 1986 to modify and permanently 
extend the work opportunity tax credit and to allow certain tax-exempt 
organizations a credit against employment taxes in an amount equivalent 
   to the work opportunity tax credit allowable to taxable employers.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 9, 1999

    Mr. Houghton (for himself, Mr. Rangel, Mr. Weller, Mr. Lewis of 
  Georgia, Mrs. Johnson of Connecticut, Mr. Matsui, Mr. Ramstad, Mr. 
 Hayworth, Mr. Lewis of Kentucky, Mr. Watkins, Mr. Levin, Mr. McNulty, 
   Mr. Cardin, Mr. Neal of Massachusetts, Ms. Dunn, Mr. Sweeney, Mr. 
   English, Mr. Foley, Mr. McInnis, Mrs. Thurman, Mr. Jefferson, Mr. 
 Coyne, Mr. Becerra, Mr. Stark, Mr. Nussle, and Mrs. Lowey) introduced 
  the following bill; which was referred to the Committee on Ways and 
                                 Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to modify and permanently 
extend the work opportunity tax credit and to allow certain tax-exempt 
organizations a credit against employment taxes in an amount equivalent 
   to the work opportunity tax credit allowable to taxable employers.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Work Opportunity Tax Credit Reform 
and Improvement Act of 1999''.

SEC. 2. PERMANENT EXTENSION AND MODIFICATION OF WORK OPPORTUNITY TAX 
              CREDIT.

    (a) Credit Made Permanent.--Subsection (c) of section 51 of the 
Internal Revenue Code of 1986 is amended by striking paragraph (4) 
(relating to termination).
    (b) Certain Benefits Treated as Wages Eligible for Credit.--
Subsection (c) of section 51 of such Code is amended by redesignating 
paragraph (3) as paragraph (4) and by inserting after paragraph (2) the 
following new paragraph:
            ``(3) Certain amounts treated as wages.--The term `wages' 
        includes amounts paid or incurred by the employer which are 
        excludable from the employee's gross income under--
                    ``(A) section 105 (relating to amounts received 
                under accident and health plans),
                    ``(B) section 106 (relating to contributions by 
                employer to accident and health plans),
                    ``(C) section 127 (relating to educational 
                assistance programs) or would be so excludable but for 
                section 127(d), but only to the extent paid or incurred 
                to a person not related to the employer, or
                    ``(D) section 129 (relating to dependent care 
                assistance programs).
        The amount treated as wages by subparagraph (A) or (B) for any 
        period shall be based on the reasonable cost of coverage for 
        the period, but shall not exceed the applicable premium for the 
        period under section 4980B(f)(4).''
    (c) Consolidation of Welfare-to-Work Tax Credit and Work 
Opportunity Tax Credit.--
            (1) In general.--Paragraph (1) of section 51(d) of such 
        Code is amended by striking ``or'' at the end of subparagraph 
        (G), by striking the period at the end of subparagraph (H) and 
        inserting ``, or'', and by adding at the end the following new 
        subparagraph:
                    ``(I) a long-term family assistance recipient.''
            (2) Definition.--Subsection (d) of section 51 of such Code 
        is amended by redesignating paragraphs (10), (11), and (12) as 
        paragraphs (11), (12), and (13), respectively, and by inserting 
        after paragraph (9) the following new paragraph:
            ``(10) Long-term family assistance recipient.--
                    ``(A) In general.--The term `long-term family 
                assistance recipient' means any individual who is 
                certified by the designated local agency--
                            ``(i) as being a member of a family 
                        receiving assistance under a IV-A program for 
                        at least the 18-month period ending on the 
                        hiring date,
                            ``(ii)(I) as being a member of a family 
                        receiving such assistance for at least 18 
                        months beginning after August 5, 1997, and
                            ``(II) as having a hiring date which is not 
                        more than 2 years after the end of the 18th 
                        month beginning after August 5, 1997, that the 
                        individual is a member of a family receiving 
                        such assistance, or
                            ``(iii)(I) as being a member of a family 
                        which ceased to be eligible after August 5, 
                        1997, for such assistance by reason of any 
                        limitation imposed by Federal or State law on 
                        the maximum period such assistance is payable 
                        to a family, and
                            ``(II) as having a hiring date which is not 
                        more than 2 years after the date of such 
                        cessation.
                    ``(B) Special rules for determining amount of 
                credit.--For purposes of applying this subpart to wages 
                paid or incurred to any long-term family assistance 
                recipient--
                            ``(i) the credit determined under this 
                        section shall include 40 percent of the 
                        qualified second-year wages for the taxable 
                        year,
                            ``(ii) notwithstanding subsection (b)(3), 
                        the amount of the qualified first-year wages, 
                        and the amount of qualified second-year wages, 
                        which may be taken into account with respect to 
                        any individual shall not exceed $10,000 per 
                        year, and
                            ``(iii) paragraph (1) of subsection (h) 
                        shall be applied by substituting `$10,000' for 
                        `$6,000' in subparagraph (A) and `$833.33' for 
                        `$500' in subparagraph (B).
                    ``(C) Qualified second-year wages.--For purposes of 
                subparagraph (B), the term `qualified second-year 
                wages' means, with respect to any individual, qualified 
                wages attributable to service rendered during the 1-
                year period beginning on the day after the last day of 
                the 1-year period with respect to such individual 
                determined under subsection (b)(2).''
            (3) Repeal of separate welfare-to-work credit.--
                    (A) Section 51A of such Code is hereby repealed.
                    (B) The table of sections for subpart E of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the item relating to section 51A.
    (d) Clarification of First Year of Employment.--Paragraph (2) of 
section 51(i) of such Code is amended by striking ``during which he was 
not a member of a targeted group''.
    (e) Technical Correction.--Subparagraph (B) of section 51(d)(2) of 
such Code is amended--
            (1) by striking ``plan approved'' and inserting ``program 
        funded'', and
            (2) by striking ``(relating to assistance for needy 
        families with minor children)''.
    (f) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        individuals who begin work for the employer after June 30, 
        1999.
            (2) Clarification.--The amendment made by subsection (d) 
        shall apply to individuals who begin work for the employer 
        after June 30, 1999.
            (3) Technical correction.--The amendment made by subsection 
        (e) shall take effect as if included in the amendments made by 
        section 1201 of the Small Business Job Protection Act of 1996.

SEC. 3. TREATMENT OF WORK OPPORTUNITY WAGES AS PAYMENT OF EMPLOYMENT 
              TAX LIABILITY.

    (a) In General.--Chapter 25 of the Internal Revenue Code of 1986 
(relating to general provisions relating to employment taxes) is 
amended by inserting after section 3510 the following new section:

``SEC. 3511. TREATMENT OF WORK OPPORTUNITY WAGES AS PAYMENT OF 
              EMPLOYMENT TAX LIABILITY.

    ``(a) General Rule.--For purposes of this title, the amount equal 
to the work opportunity credit amount with respect to any wages paid 
for any calendar quarter by an eligible tax-exempt employer shall be 
treated as a payment by such employer of such employer's employment tax 
liability for such calendar quarter.
    ``(b) Work Opportunity Credit Amount.--For purposes of this 
section, the work opportunity credit amount for any calendar quarter is 
the amount of the credit determined under section 51 (relating to work 
opportunity credit) in accordance with the following:
            ``(1) Minimum employment periods.--For purposes of applying 
        section 51(i)(3), in lieu of the hours of services actually 
        performed by an individual during any of the first 3 quarters 
        of a calendar year, an employer may make an estimate of the 
        hours of services an individual is reasonably expected to 
        perform for the employer in such calendar year. The employer 
        shall adjust the deemed payments in accordance with subsection 
        (c) for the last quarter of such calendar year to reflect the 
        hours of services actually performed by such individual in such 
        calendar year.
            ``(2) Eligible tax-exempt employer.--The term `eligible 
        tax-exempt employer' means any organization described in 
        section 501(c)(3) and exempt from tax under section 501(a) but 
        only with respect to activities of such organization which do 
        not constitute an unrelated trade or business.
    ``(c) Coordination With Depository Requirements.--
            ``(1) In general.--Any employer who is entitled to treat 
        any amount as a payment under subsection (a) for any calendar 
        quarter may reduce, in such manner as the Secretary may by 
        regulations prescribe, by a like amount, the amount otherwise 
        required to be deposited during such quarter by reason of the 
        employment tax liability of such employer.
            ``(2) Quarterly determinations.--The amount of reduction 
        permitted under paragraph (1) for any calendar quarter shall be 
        based on a separate estimate for such quarter of the amount of 
        deemed payments to which the employer reasonably expects to be 
        entitled under subsection (a) for the calendar year which 
        includes such quarter and shall be properly adjusted (under 
        regulations prescribed by the Secretary) to reflect the amount 
        by which prior reductions under subsection (a) during such 
        calendar year were in excess of, or less than, the amounts 
        which would be proper under such estimate.
            ``(3) Year-end adjustments.--
                    ``(A) Excess of deemed payments allowable over 
                depository benefit claimed.--If the amount of deemed 
                payments to which an employer is entitled under 
                subsection (a) for any calendar year exceeds the amount 
                claimed by the employer under paragraph (1) during such 
                year, such excess shall be treated for purposes of this 
                title as an overpayment made by such employer. For 
                purposes of determining interest, such overpayment 
                shall be treated as made on January 31 of the following 
                calendar year.
                    ``(B) Depository benefit claimed exceeds deemed 
                payment allowable.--If the amount claimed by the 
                employer under paragraph (1) during the calendar year 
                exceeds the amount of deemed payments to which such 
                employer is entitled under subsection (a) for such 
                year, such excess shall be treated for purposes of this 
                title as an underpayment of the tax imposed by this 
                chapter for such calendar year. For purposes of 
                determining interest, such underpayment shall be 
                allocated ratably among the calendar quarters in such 
                year (or in such other manner as the Secretary may by 
                regulations prescribe).
    ``(d) Payment Treated as Made on Due Date.--Notwithstanding 
subsection (c), for purposes of determining interest, any deemed 
payment under subsection (a) for any calendar quarter shall be treated 
as made on the due date for the return for such quarter.
    ``(e) Employment Tax Liability.--For purposes of this section, the 
term `employment tax liability' means liability for the taxes imposed 
by chapters 21 and 24.
    ``(f) Social Security Trust Funds.--This section shall not be 
construed to affect amounts appropriated under sections 201 and 1817(a) 
of the Social Security Act.
    ``(g) Termination.--This section shall not apply to wages paid to 
an individual who begins work for the employer after December 31, 
2002.''
    (b) Clerical Amendment.--The table of sections for chapter 25 of 
such Code is amended by adding at the end the following new item:

                              ``Sec. 3511. Treatment of work 
                                        opportunity wages as payment of 
                                        employment tax liability.''
    (c) Effective Date.--The amendments made by this section shall 
apply to individuals who begin work for the employer after December 31, 
1999.
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